logging in or signing up Break-Even ibgarrow Download Post to : URL : Related Presentations : Share Add to Flag Embed Email Send to Blogs and Networks Add to Channel Uploaded from authorPOINT lite Insert YouTube videos in PowerPont slides with aS Desktop Copy embed code: (To copy code, click on the text box) Embed: URL: Thumbnail: WordPress Embed Customize Embed The presentation is successfully added In Your Favorites. Views: 7715 Category: Education License: All Rights Reserved Like it (3) Dislike it (0) Added: November 15, 2007 This Presentation is Public Favorites: 0 Presentation Description Business Studies Break-Even Comments Posting comment... By: narakasura (19 month(s) ago) it so good to understand Saving..... Post Reply Close Saving..... Edit Comment Close By: Shilpa1978 (23 month(s) ago) pls send me this presentation at shilpabuche@rediffmail.com Saving..... Post Reply Close Saving..... Edit Comment Close By: mmmkkk (26 month(s) ago) hello nice ppt Saving..... Post Reply Close Saving..... Edit Comment Close By: navneetmba (28 month(s) ago) It's good but not enough Saving..... Post Reply Close Saving..... Edit Comment Close Premium member Presentation Transcript Break Even: Break Even Lesson Objectives: Lesson Objectives Understand the meaning of break even. Ability to calculate break even point using the contribution method.Key terms from last lesson: : Key terms from last lesson: Total Variable costs = variable costs x output level. Total costs = Fixed costs + variable costs. Total revenue = price per unit x sales.What is break even?: What is break even? It is the point at which the business makes just enough revenue to cover their costs. In other words profit = 0 Businesses must make a profit to survive. To make a profit, revenue must be higher than costs. “A business breaks even if it doesn’t make a profit or a loss”Calculating the break even point: Calculating the break even point There are two ways to calculate the break even point. The two ways are as follows: - The CONTRIBUTION METHOD. - PRODUCING A BREAK EVEN CHART. The Contribution Method: The Contribution Method This involves a two part calculation: Selling Price per unit – variable cost per unit = contribution (towards fixed costs). AND Fixed costs divided by contribution = Break even point.Contribution Method - Example: Contribution Method - Example If fixed costs = £2000, variable costs = £8 per unit, Selling price per unit =£10. Then break even would be: Price per unit – variable cost per unit = contribution (towards fixed costs). £10- £8= £2 (Contribution towards fixed costs) Fixed costs divided by contribution = Break even point. £2000 divided by 2 = 1000 1000 products will need to be sold in order order to break even and cover all their costs.Task – Using the information from the previous slide answer the following questions.: Task – Using the information from the previous slide answer the following questions. Would the business be in a profit or loss situation if they sold 1001 units? What would the business in a profit or loss situation if they sold 999 units? How much profit will the business make if they sell 1001 units?Task – Calculate the following the break even points using the contribution method: Task – Calculate the following the break even points using the contribution method [1] Fixed costs £4000 Selling Price £400 Variable Cost £200 [2] A business has the following costs: Rent £200 per month Rates £30 per month Salaries £450 per month Selling price £9 Raw materials £7Task: Task A business making t-shirts has the following costs: Fixed Costs £50,000 per year Variable Costs £3.70 per t-shirt Selling Price £12 each [a] Calculate the break-even point? [b] What would be the revenue as break-even? You do not have the permission to view this presentation. In order to view it, please contact the author of the presentation.
Break-Even ibgarrow Download Post to : URL : Related Presentations : Share Add to Flag Embed Email Send to Blogs and Networks Add to Channel Uploaded from authorPOINT lite Insert YouTube videos in PowerPont slides with aS Desktop Copy embed code: (To copy code, click on the text box) Embed: URL: Thumbnail: WordPress Embed Customize Embed The presentation is successfully added In Your Favorites. Views: 7715 Category: Education License: All Rights Reserved Like it (3) Dislike it (0) Added: November 15, 2007 This Presentation is Public Favorites: 0 Presentation Description Business Studies Break-Even Comments Posting comment... By: narakasura (19 month(s) ago) it so good to understand Saving..... Post Reply Close Saving..... Edit Comment Close By: Shilpa1978 (23 month(s) ago) pls send me this presentation at shilpabuche@rediffmail.com Saving..... Post Reply Close Saving..... Edit Comment Close By: mmmkkk (26 month(s) ago) hello nice ppt Saving..... Post Reply Close Saving..... Edit Comment Close By: navneetmba (28 month(s) ago) It's good but not enough Saving..... Post Reply Close Saving..... Edit Comment Close Premium member Presentation Transcript Break Even: Break Even Lesson Objectives: Lesson Objectives Understand the meaning of break even. Ability to calculate break even point using the contribution method.Key terms from last lesson: : Key terms from last lesson: Total Variable costs = variable costs x output level. Total costs = Fixed costs + variable costs. Total revenue = price per unit x sales.What is break even?: What is break even? It is the point at which the business makes just enough revenue to cover their costs. In other words profit = 0 Businesses must make a profit to survive. To make a profit, revenue must be higher than costs. “A business breaks even if it doesn’t make a profit or a loss”Calculating the break even point: Calculating the break even point There are two ways to calculate the break even point. The two ways are as follows: - The CONTRIBUTION METHOD. - PRODUCING A BREAK EVEN CHART. The Contribution Method: The Contribution Method This involves a two part calculation: Selling Price per unit – variable cost per unit = contribution (towards fixed costs). AND Fixed costs divided by contribution = Break even point.Contribution Method - Example: Contribution Method - Example If fixed costs = £2000, variable costs = £8 per unit, Selling price per unit =£10. Then break even would be: Price per unit – variable cost per unit = contribution (towards fixed costs). £10- £8= £2 (Contribution towards fixed costs) Fixed costs divided by contribution = Break even point. £2000 divided by 2 = 1000 1000 products will need to be sold in order order to break even and cover all their costs.Task – Using the information from the previous slide answer the following questions.: Task – Using the information from the previous slide answer the following questions. Would the business be in a profit or loss situation if they sold 1001 units? What would the business in a profit or loss situation if they sold 999 units? How much profit will the business make if they sell 1001 units?Task – Calculate the following the break even points using the contribution method: Task – Calculate the following the break even points using the contribution method [1] Fixed costs £4000 Selling Price £400 Variable Cost £200 [2] A business has the following costs: Rent £200 per month Rates £30 per month Salaries £450 per month Selling price £9 Raw materials £7Task: Task A business making t-shirts has the following costs: Fixed Costs £50,000 per year Variable Costs £3.70 per t-shirt Selling Price £12 each [a] Calculate the break-even point? [b] What would be the revenue as break-even?